Finding ways to lower your home insurance is very important when finances may be tight. There are some good ways to accomplish this, but going out and buying the cheapest homeowner’s insurance around is not necessarily wise. Here are some reasons why you want to be sure to take some time to select a good homeowner’s insurance company – and why you may want to avoid the lowest bidder.
They May Raise Your Rates Later
Insurance companies make money from those who pay their premiums. While they may start out with a very good price, you need to realize that they cannot make money or soundly insure people for next to nothing. Rates tend to increase over time.
They May Not Be Able to Pay on Claims
Newer homeowner’s insurance companies may not be able to pay the claims that are given to them, especially if there are multiple claims from the same event. This can easily happen in a flood, tornado, hurricane, or earthquake.
Checking their history of paying on claims is very important. You can get this information online while you are looking into the homeowner’s insurance company.
They May Be Desperate for Your Business
Another reason why an insurance company may try to give you the lowest cost of anybody might be to make sure they get your business. Although there certainly is competitiveness in the market, being the lowest bidder is almost like groveling. If they need to grovel, are you sure they can handle your claims? On the other hand, they may be trying to get last minute business so they can stave off going bankrupt. You want to make sure that the company that handles your homeowner’s insurance is a stable company.
They May Quickly Drop Clients When Claims Are Made
While there are a number of home insurance companies that will drop you after a claim is made, you can almost be sure that a low cost insurance company will. They cannot afford to take further risks with a proven loss – unless they are a very large company.
They May Not Be A Real Homeowner’s Insurance Company
One more reason that they may be the lowest bidder is that they may be a scam. There are many scammers today. Some of them will even pay some small claims before they disappear. This gives them even more business and a greater appearance of being legal.
If you have not heard of the home insurance company before, then you need to do some investigation. You can check to see if it is a legitimate company by going to your state’s Insurance Commissioner’s Web site, and you can search online for complaints against the insurance company, too. If you find no complaints, the insurer may be too new to have developed any yet. At other Web sites, you can find out a homeowners insurance company ratings and see how well it performs when compared with other companies.
Legitimate insurance for homeowners companies are competitive in their pricing, and this means that their pricing is rather close to others. When you find one company that is much lower, and the deal almost sounds too good to be true – it probably is.
